The Australian Manufacturing Purchasing Managers’ Index (PMI) is one of the most important economic indicators that measures the level of activity of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion in the sector, while a reading below this level indicates contraction. We compile the Australian Judo Bank Manufacturing PMI report by responding to monthly questionnaires sent to purchasing managers across a group of around 400 products.
The cross-sectional indicator is the Purchasing Managers’ Index (PMI), which is a weighted average of the following five indicators: new orders (30%), production (25%), operation (20%), supplier delivery time (15%), and purchase inventory (10%) ). The value of the supplier delivery time indicator is reversed until it moves in a direction comparable to other indicators. The index ranges between 0 and 100, with a reading above 50 indicating a general increase compared to the previous month, and a reading below 50 indicating a general decrease. This page provides – Australia Manufacturing PMI – actual values, historical data, forecast, chart, statistics, economic calendar and news.
The importance of the index: This index is among the main indicators that traders closely monitor, because purchasing managers often obtain early data about the performance of their companies, which makes the index a leading indicator of overall economic performance. Any change in this indicator is considered an advance indication of the economic situation.
The impact of the index on the Australian dollar:
Higher than expected reading: Taken as positive/bullish for the Australian dollar, as it indicates an expansion in economic activity and thus supports the currency. Lower than expected reading: Taken as negative/bearish for the Australian dollar, as it indicates a contraction in economic activity which weakens the currency.
Growth in private sector activity in Australia accelerated at the start of the second quarter
Private sector activity in Australia continued to expand in June, but remained driven by services. Businesses worked to address their arrears amid a decline in new business, supported by rising employment levels. Meanwhile, selling price inflation slowed in June amid lower cost pressures and lower confidence levels. The Judo Bank Flash Australia Composite PMI® Output Index* registered 50.6 in June, down from 52.1 in May. The latest reading indicated that private sector activity expanded for the fifth month in a row, but at a slower and only marginal pace. Growth in business activity was again primarily driven by the services sector
Growth in private sector activity in Australia accelerated at the start of the second quarter, supported mainly by growth in the services sector. Higher new business inflows also supported rises in business activity and employment, while companies remained optimistic about future output. Regarding prices, the rate of rise in output prices slowed in April despite higher input cost inflation. The Godot Flash Bank Australia Composite Outcome Index registered 53.6 in April, up from 53.3 in March. The latest reading indicated that private sector activity expanded for the third month in a row and at the fastest pace since April
Private sector activity in Australia continued to expand in March, albeit limited to the services sector. The rise in new inbound business has led to growth in business activity and employment. This was while price pressures eased with lower input cost inflation and output price rates recorded in March. Public sentiment rose to a combined seven-month high. The Judo Bank Flash Australia Composite PMI® Output Index* registered 52.4 in March, up from 52.1 in February. The latest reading indicated that private sector activity expanded for the second month in a row and at the fastest pace since April 2023.
Australia’s preliminary PMI was weak
Private sector activity in Australia contracted again at the end of 2023 as demand conditions, including foreign demand, remained under pressure due to the current economic backdrop. Input cost inflation fell, but companies raised their prices at a faster rate. Overall employment has continued to grow, while optimism has improved since November. The Judo Bank Flash Australia PMI composite output index came in at 47.4 in December, up from 46.2 in November. This marked a third straight month of decline in business activity, albeit a softer one than the one seen in November, when output fell by the most in 27 months.
Australia’s preliminary PMI was weak. The manufacturing PMI remained below the boom/bust level of 50. It has not been higher since February. The preliminary reading for October was 48.0, down from 48.7 in September. The service sector also contracted. The preliminary reading fell to 47.6 from 51.8. The composite index fell to 47.3 from 51.5. It is the weakest since January 2022. Last October, the composite index was at 49.8. Tomorrow, the CPI for the third quarter will be announced. It is expected to slow to 5.3% from 6.0% in the second quarter. The weighted and deflated average measures are expected to slow as well. The market expects the RBA to stick to its hawkish stance at its November 7 meeting. The futures market excludes about 75% of the probability that the RBA will remain unchanged.
The dollar rose above the 150 yen level briefly at the start of the Asia-Pacific activity and it looked like it would try again in North American activity as the yield on the US 10-year Treasury note rose above 5.0%. However, North American traders have realized that their counterparts abroad are leaning in the wrong direction.
